A pensions expert has welcomed a move in the Autumn Statement today to bring annuity death benefits into line with drawdown.

The abolition of the pensions death tax was announced by George Osborne at the Conservative party conference in October but he added detail to this in his speech to Parliament this afternoon.
He said: "I confirm that the 55% death tax that currently applies when you pass an unused pension pot on to your loved ones will be abolished. People will be able to pass on their pensions to their loved ones tax free.
"I can also tell the House today that we will ensure that people who die before the age of 75 with a joint life or guaranteed term annuity can pass that on tax free too."

{desktop}{/desktop}{mobile}{/mobile}

Andrew Tully, pensions technical director at MGM Advantage, said: "This change brings annuity death benefits into line with drawdown, where on death before age 75 benefits can be paid tax-free.
"For deaths after age 75, a dependent's pension or remaining guaranteed installments will be taxed as income in the hands of the recipient (again in line with drawdown).
"Allowing annuity benefits to be paid to any dependent gives people greater flexibility to pass on their pension wealth, for example to grown-up children.
"But it is worth keeping in mind this change will only benefit the estate of those who die before age 75. If you are a healthy 65 year old, then you have a 90% chance of surviving your 75th birthday. If you have moderate health conditions, for example diabetes or high blood pressure, then you have an 80% chance of surviving your 75th birthday."
He described it as "a fair move for customers who value the security and guarantees that annuities deliver".
He said: "It shows the Government recognises that annuities can still play an important part of a customer's retirement strategy after April. While people may well want to use the new flexibility offered, many will also want a level of certainty and security provided by an annuity to cover at least their basic income needs."

Get FREE daily news summaries direct to your inbox. Sign up on the homepage now.

Follow us on Twitter and get frequent news alerts @FPM_online.

Or follow Editor Kevin O'Donnell - @FPM_Kevin or staff writer James Nadal - @FPM_James.

For the latest Sipp, SSAS and retirement news visit our sister news site www.sippsprofessional.co.uk and on Twitter @SippsPro.